Dell on the defensive

Michael Dell built his computer company in 1984 with his own two hands, literally, crafting custom PCs in his University of Texas dorm room. According to this interesting New York Times piece by Steve Lohr, he’s building it again. And it doesn’t sound like an envious job.

Over the last few years, Dell, once the gold standard among PC makers, has simply overlooked major growth trends in personal computing. It missed significant shifts in notebook computer sales and the consumer market as a whole, lagged competitors in international sales, and lost the profit edge that it enjoyed from its superior procurement-and-supply network. Hewlett-Packard, having overcome its own woes, passed Dell last year as the largest seller of PCs worldwide.

Dell’s ills also extend beyond the nuts-and-bolts of making and marketing PCs. After a yearlong internal investigation, Dell conceded last month that some managers had falsified quarterly results to meet sales targets from 2003 to 2006. The company expects to reduce earnings over those years by $50 million to $150 million, tiny sums compared with the billions of dollars in profits it earned during that same period. (Dell posted annual sales of about $57 billion last year.) Yet the accounting disclosures suggest a corporate culture in which at least some senior managers felt under such pressure that they doctored the numbers; the disclosures have prompted a Securities and Exchange Commission investigation.

“The company was too focused on the short term, and the balance of priorities was way too leaning toward things that deliver short-term results — that was the major root cause,” explains Mr. Dell, dressed for the Texas summer in a short-sleeved polo shirt and jeans.

Dell also fell prey to the classic cycle of growth, arrogance and decline that I outlined two years ago. Success and profits lead to a sense of invulnerability and, in the cutthroat personal technology business, no one lives forever.

Dell turned its business model into a religion, and was determine to stick to it, no matter what. The company ran afoul of a Darwinian truth: Evolve or die. According to the Times story, Michael Dell has shut down the direct-model tent revival and is evangelizing otherwise:

At internal meetings, he repeatedly emphasizes that the Dell model “is not a religion,” according to staff members. Moreover, Mr. Dell — who once ran a company famous for its laserlike devotion to next week rather than next year — no longer champions short-term goals and fixes. “We’re moving the needle in terms of getting focused on the right long-term issues,” he says.

But re-engineering the Dell model will be a daunting challenge. “Dell continued to do the same old thing, when it was no longer working,” observes David B. Yoffie, a professor at the Harvard Business School. “This is going to be about changing the way they do business at many levels.”

“Dell can do it,” Mr. Yoffie adds, “but it’s going to take a lot more innovation on more fronts than the company has shown in the past.”

To throw yet another analogy on the pile, Dell became a direct-model drunkard, and it wasn’t until the company hit bottom that it decided to change. Michael Dell himself is providing the intervention.

Of course, the proof as to whether Dell is reformed will come from the experiences its customers have. From the enterprise to the buyers of its lowest-cost systems, Dell has to create delight or risk losing customers.

I am asked daily by people to recommend a PC. They want to know not just specs, but brands. When they ask about Dell these days, I have to say that I don’t know if I can recommend them. I’ve heard too many tales in the last two years of defective computers and horrific tech support. Recently, I’ve heard only sporadic reports of delightful customer experiences, and occasionally still hear about nightmares.

So let me ask the readers of TechBlog who’ve bought a Dell in the last 12 months: What’s it been like? Were you happy with your purchase? Did you have to use tech support, and if so, what was it like?

From your experience, is Dell making a comeback? After all, your experience is ultimately Dell’s bottom line.

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21 Responses

Wow, something i can finally offer an opinion on. I am the owner of an older Dell Inspiron 600m, their first Centrino offering, if I recall correctly. I love it…still works as well as what I need it for. A year after I got it, the hard drive crashed, but Dell was great about it. Their tech support was quick and painless, and overnighted me a new HD, and even called to help me install it, then again a few days later to see if everything was OK. A HDD crash I could not blame them on, since it was a Toshiba drive, and hell, things happen.

Fast forward to this summer, when my fiancee bought a new Inspiron 1405, decked out with all the trimmings. Immediately there were problems. First, the thing is built like a toy compared to my 600m. She doesnt use it a lot, but the mouse buttons are already wearing off the color. Secondly, and much more importantly, she was “losing her resolution” when she would close her screen, and revert back to 800×600, and a 4:3 screen, instead of a high-resolution widescreen display she wanted. This happened EVERY TIME. I looked at it, reinstalled video drivers, no change. I played around, but to no avail, and she decided to call tech support. This is where the fun begins.

I consider myself a very liberal person, but it was obscene to be talking to someone about an issue as frustrating as this to someone whose English was as bad as this man’s in India. (Yes, India…I asked him). He set up a chat window with my fiancee, and during the time, he took control of the computer. As he was doing that, he was asking her questions, THEN ANSWERING FOR HER!! He would say, “Is that satisfactory”, and then would type under her prompt, “Yes, thanks for all the help”. This was unreal. Alas, hours went by, and no problem was solved. She spent roughly 4 hours one day trying to get it fixed, and the problem was never solved. He suggested to wipe out everything and reformat the HD.

I looked at the computer and searched for the problem on the internet…surprise, it is a common problem for Dells to revert resolution. Basically a workaround is to play with the power settings of the laptop…which did eventually work.

Bottom line, her computer has been a disappointment since day one (other crashes, it has shut off randomly a few times), and a 4+ hour call to a non-English speaking tech support person proved fruitless.

Seems to me that Dell’s claim to fame, and their only real home run, was in the marketing and distribution area rather than in engineering and design.

That is, they were the first to sell direct to consumers and cut out the middle man. This gave them 100% of the sales dollar whereas competitors had to share that sales dollar with a retailer. The result was that they were able to offer the consumer more computer for his money and still maintain high profit margins. That made them into a growth company.

It was never about great engineering and better products with Dell. They’re a PC Clone manufacturer which means that they have to design their products to work with the current version of Microsoft Windows. They take what they’re given by AMD, Intel, and Microsoft. They buy parts. They assemble.

They do not invent or innovate to any great extent, nor have they ever done that. They have to design to meet specs given to them by someone else. They’re not really a computer company in the same sense that Apple, Sun, or IBM is a computer company. They’re more of an assembly, distribution, and marketing company.

Now their competitors have figured out how to do direct selling. They’re no longer able to offer more computer for the money. As their margins deteriorated they tried to cut costs, especially in the support area by using international support. That put a bit of a cloud over their reputation for good customer support.

Michael Dell is going to have to pull another rabbit out of his hat to turn Dell around.

I have a Dell Inspiron E1505. This has been a great laptop for me and met or exceeded all expectations. I had a book fall off a bookshelf and landed on, and broke the keyboard. Dell tech support was great, and since I had complete care, I had new keyboard in my hands and installed in 2 days.

I bought a Dimension 9200 for one of my grandkids. So far the computer has met expectations with no need for tech support. Only issue has been all the junk that was preloaded.

Also have a new Dell Inspiron 530 with Vista Home Premium. So far no issues with the computer or need for tech support. Only issue has been Vista and problems with printer drivers for Dell printers.

One year old Dell printers, AIO 964, and 720, just do not work well with Vista. It takes 3-5 minutes to print one page, and the all in one center for scan and fax just does not work. I have spent hours browsing the Dell forums and uninstalling and reinstalling the printer drivers. Dell printer problems related to Vista seem to be very common.

All in all, good experience with the computers and the limited exposure to tech support has been good. One note on tech support, all of the computers were bought via a corporate purchase plan, and that may take you to a different tech support channel.

I have a Dell Dimension 8300 W/XP Pro and a new Dimension 9200 W/Vista Ult. I have had no problems whatsoever with my older Dell 8300 and no problems with my new Dell 9200 so far. I have never had to call Dell Tech Support. I would highly recommend a Dell to anyone. The 9200 has recently been phased out to the XPS 410. Sorry if you were looking for a Dell basher here…

Had many problems,not the least was no repair service. I am disabled and finally had to call Advococy incorporated, who became my advocate with Dell and after 10 months, was able to get Dell to repair said computer. I spent countless hours trying to get things fixed, even though on-site warranty was sold with the computer. Excuses from we don’t honor that to we can’t come out that far (Onalaska) to you are stuck with it, including having to re format and re-install the software 7 times in less than 3 months while my bos was upset that I was always having to have extra time to do my work. I will never pruchase another Dell product. And the printer cartridges are propietary and can only be bought from Dell.

While I haven’t bought a new computer in the last year, I did have occasion to call their tech support recently.

The recent experience was far better than the first week I bought the XPS, 1 1/2 years ago. On the last call, I actually talked to a human within 5 minutes of calling; last time I waited OVER an hour. Yes, I did get India, but they tried to help. No, they didn’t solve the problem, but referred me to customer service, in the U.S., who did.

…you know i bought a dell inspiron e1405 as well and had somewhat the same experience. The computer is no unlike the quality of a “toy” and parts wore out very quickly and upon reaching that dreaded one year mark many things went wrong days before my guarantee ran out.

my dvd drive no longer functioned, my monitor began having large dark spots, my audio was cracked sounding and undependale, my fire wire no longer worked and my battery adapter cable had frayed.

i use my laptop ALOT. i have my own small business where i see alot of elderly folks who need help and i had recommended Dell to them many times prior.

i contacted dell and spent 6 hours on the phone with Prabhu in India, he was ok, when i could understand him and we arranged to have my computer fixed out in tennessee i guess it is….it took 6 hours to arrange that task.

the work was done, i got my laptop back and everything was good again except for the dvd drive was experiencing the same issue, i called back Dell and for lack of a better answer there response to me was F*ck You, we dont warranty our repair merchandise, but we can do diagnostics on it with you now, but we will are going to charge you for it.

i ran my cell phone completely out of minutes that day, had to refill it and then continue this madness….all in all, almost 7 hours.

i would never ask one of my clients to go throught this, so I will be selling my dell now that i have bought and restored the DVD drive they were unable to fix.

I have purchased 2 XPS 410′s this past year. On one I had lightning strike near home (Houston) 10 days after purchase and strangely the only problem was the ethernet port was killed. Within 3 days, a tech came to my home and replaced the motherboard. There is dedicated support for the XPS and they were immediately available and responsive. I have recommended this computer to 4 other friends (not tech savvy) who have purchased. All have been happy with the purchase. Two friends needed some early software support which was prompt and accurate from the Dell Support. That is my experience. I confidently recommend Dell.

In the last year I have purchased an Inspiron 1505 and two XPS410 computers. The Inspiron was new while the XPS’s were refurbished units. All have performed perfectly and not one call to any tech support.

One of the XPS410′s has Vista. Vista works perfectly and I have had no driver issues. There was one program I use daily that would not install but when I ran the installation program in XP compatibility mode it installed and works just like it did in XP.

As a side comment to those who buy Inspiron laptop’s for business use: do not. The Latitude line is for business use. I would say the same for those who buy Toshiba Satellite laptops. These are consumer grade not business grade laptops.

From the outside looking in, I don’t see what difference it makes when you buy a PC – they all run the same thing – Windows. You can differentiate then on price, and maybe hardware design, and then support – but you’re supporting something you don’t entirely control – since you don’t make the OS.

So, they cut costs by moving the support overseas, and keep the price low by not doing anything interesting with the hardware design.

I guess if I were Dell I’d try to be distinctive with a slimmer array of products, with decent hardware design and great non-outsourced support. THat’d mean charging more, however. It does seem a challenge to differentiate though, when selling a Windows PC.

Dell will recover from these “troubles”. When you hear a lot of people talk about the value of a PC, they often talk about the price tag. They often forget that value is a balancing act between quality and price. If you get a product at a low price and it functions flawlessly, for a reasonable life cycle, that is value. A product failure, within that reasonable life cycle, that gets hassle free support from the vendor, that’s also a good value. Cheap is good, but only down to a point.Where Dell has fallen down a bit lately is in pushing that quality/price ratio as hard as they can, both at the hardware and at the support of the hardware. All they need to do is restore the balance. I think they’ve found the bottom quality point that their customers will accept, in both the hardware and the support. Dell needs to take their Chinese contractors in-hand to get the initial build quality up. That may be better designs, it may be better quality control on the factory floor. Dell knows how to do that and I’m confident that they will. Dell also needs to revise the phone support situation and do it soon. They need to bring the phone support back on shore. This has to be done. The standing of the Dell brand demands it. Dell is still a brand that people look to for quality products and support. Time is running out on that perception.

I’m the network manager and purchase computers for a very large department at one of the largest universities in the state (20+ yrs experience). My first choice for desktops are a local company in town that builds their own systems. I can specify every component that goes into it, and their service is superb. The ONLY national brand PC maker I will purchase is Dell (I used to like Gateway a lot, but after their merger with E machines I saw quality go downhill fast). Yes, their tech support has ALWAYS been bad (I first bought one when it was still PC Computers). I cringe when having to call their support. But their computers are far superioer to the crap that Compaq and later HP shove out. When I’ve received faulty products, like the laptop recently with a bad screen, I had an onsite tech show up with 2 days to install a new screen. I won’t have an HP computer in the department, except for their servers. Love their servers, won’t touch their desktop or laptops. Personally, I’m starting to wish we had more sections using Macs. My Mac users rarely have any problems.

In 1994, I bought my first PC and the choice decision was between Dell and Gateway. However for the same hardware configuration, the Dell desktop was more money. When I looked at the specs, it looked like Dell had built in a lot of redundancy and the desktop was over-engineered, so I purchased the cheaper Gateway.

Boy, did I make a mistake. After purchasing my Gateway, I discovered that my MCI client had tried out Gateway and discovered the quality was inferior and therefore was not suitable for their corporate infrastructure. They made Dell the standard.

I had problems almost from the very beginning and the tech support was horrible. To make a long story short, the computer was shipped with a defective motherboard, but Gateway refused to make good on it. I hired three different tech support companies, before the problem was finally identified and it cost me $2,000 to buy a new motherboard and new RAM. Then a year later, my $1,000 monitor went out.

From that point forward, I bought and recommended Dell to family, friends and clients and didn’t have any problems. Tech support was excellent and the hardware worked.

In 2002, I bought new computers with premium next business day tech support ($500 extra) and discovered their India tech support which was worthless. Dell never provided the next business day support that I had paid for.

I would like to see Dell return to the high quality company that it was in the 90′s with award-winning documentation, top-notch tech support and great computers.

Unfortunately, I don’t know if that is ever going to happen. The latest effort, http://www.dellideastorm.com/, that Dell has put forward to communicate with their customers has been a huge disappointment. It has evolved into a won way conversation, where posters post problems, suggestions, etc. but there is no response from Dell.

It is like the posters are talking to a brick wall. Many people have suggested that they need someone like Dwight to be much more responsive. As a result of this lack of communication, probably 80% of the traffic to this website have fallen by the wayside.

This is Dell’s third attempt to be more responsive. If they can’t manage this simple task, I have very little hope that they can manage the much tougher situations that it is going to take to turn Dell around.

As a member of Dell’s digital media team, I’d like to add a bit of context. The first step to solving a problem is acknowledging you have one, and we have tried to be forthcoming (read take our lumps) as we work around the clock to strive for a consistently positive customer experience. And, as Michael Dell has said on many occasions, we are just beginning our turnaround, and there is much to do over the next 18 months or so. Viewing Dell from the inside, there is no shortage of confidence that — by looking at the challenges through the eyes of customers — we will come back stronger than ever.

I bought a Dell in 1999. They substituted less expensive parts for the configuration I ordered, took an extra month to get it to me, and charged an awful lot of money for a machine of mixed performance. Since then, I’ve been unable to recommend Dell. I did recommend Alienware for some time, and later Lenovo, but I’m not really thrilled by any of the major desktop makers. I advise people to go put together their own.

I’m typing on my 4th Dell. This one is called “Overkill” because it’s more than I’ll ever need… but I bought it with an eye towards *having* to run any Windows OS they could throw at me sooner or later. I bought THIS one NOW because I could still get it with XP.I’d rather sit on a hot laptop bottom than deal with tech support. My Indian is not up to par! I’m from East Texas…we barely speak English! I try and solve the problem myself or with the help of my guru(s). I pay for the extended warranty but that’s for any hardware issues that might arise.I keep going with Dell because I love the chance to figure out what I want in the privacy of my own home without some geeky kid standing at my elbow half listening to me and keeping his eyes on the cute young thing an isle over. It’s simple to buy a computer actually…all you have to keep in mind is the more RAM the better and the absolute biggest harddrive you can afford. All the rest is just gravy.I’m very pleased with this XPS 710 and my older Dell laptop. If I didn’t buy from Dell I’d find someone to build me a box….there again the bottom line for me is being able to say what I want included. I’d never buy an off the shelf system from any of the retailers!

Hope they solve problems with failure of monitors. I have within the last year sought to get a monitor repaired that was JUST out of warranty. No soap, no offer of a solution: just NO.

I’m guessing that if it had been within warranty, all they’d do is just send me a new monitor.

I took the LCD monitor apart and trying to replace the power supply (almost surely what the problem is) is an amazing difficult problem, due to the way it is all assembled: it does not seem to this engineer to be built for repair at all.

As this is for a church office, a new one is not coming forth. I’m stuck with using an old CRT that is so old the visible image takes a large portion of a minute to even appear, due to the lack of filament emission.

But, who knows? (maybe some readers) Maybe they will work toward repairable monitor units. I’m not holding my breath.

After buying a couple Apples, I can never go back. The customer service is so great; including their outstanding Genius Bar in their stores. They have the business model down. I have horror stories though about “trying” to call Dell.

I just received an Inspiron 530 desktop on Wednesday. I built the system on the web, but XP was not offered as an OS. I called and asked if I could have XP Pro instead of Vista Home Premium. They let me do that. When I received the email confirming the order, I did not notice that the dual cd drive and wireless card were missing from the order.

When the system arrived, I was disappointed to find them missing. When I checked the order I did not see them even though I thought I certainly had ordered them. I went back online, built the same system and noticed that the configured price with the two missing components was less than I had paid, even though I had only ordered the system three days earlier.

Long story short, I called Dell. They offered to take the system back. I didn’t want to go through that hassle. They xferred me to cust service who offered me a $50 refund. I asked for $70 because that was the cost of the missing components on the website, and they agreed. It all went very smoothly and I was happy. Customer service was great.

I am disappointed that I will need to purchase these components and install myself, but I should have paid more attention to the order confirmation upon receipt.